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By Jo Best, 12 January 2005 08:25

NEWS Yes, the rumours were true: Apple is launching a flash-based iPod and the iPod's baby brother, the iPod Shuffle, is out today.

The iPod Shuffle comes in the ubiquitous Apple white and has the now familiar click wheel but, as the new Mac mini has proved, Apple has decided to take a hatchet to its prices and will be offering the digital music player from $99 or £69 in the UK.

Two models have started shipping from today. The first, lower priced version, will come with 512MB memory, while a $149 model will ship with 1GB of memory. Both versions will pack 12 hours of battery life.

The Shuffle is compatible with Mac or PC and connects via USB. It's also smaller than most packs of gum, according to Apple boss Steve Jobs.

As well as Apple's trademark white headphones, the Shuffle also comes with a lanyard, to hang it round your neck.

Apple is making a return to the iPod accessories market with four products designed to go with the iPod Shuffle - an armband, dock and sports case and a battery life extender, which can take the iPod's lifespan to 20 hours. All the iPod accessories will cost $29.

Steve Jobs is also trying to turn the iTunes association to Apple's advantage as he has with the mini and standard iPods. iTunes has been revamped to provide the Shuffle with an autofill - a function that will select either a playlist, a user's most played songs or a random selection and tailor the amount of songs it sends to the iPod to fit the room left on the device.

Steve Jobs said of the device: "We'd like to go after the remaining mainstream flash market... [the market] is like a zoo - there's a million little flash players."

"We want to bring even more people in," he added.

Apple claims the iPod mini has already eroded the flash-based music player market. In Janurary 2004, flash players held 62 per cent of the market, the iPod had 31 per cent. In January 2005, flash players had 29 per cent of the market, with the iPod taking 65 per cent.

An Apple spokeswoman said that the new player was "absolutely" aimed at the teenage market and had been held back until January - missing the lucrative Christmas spending - solely for Macworld.

When rumours of the 'mini mini iPod' were first mooted, some speculated that Apple would cut off its lucrative mini iPod nose - that consumers would stop buying the more expensive iPod in favour of the cheaper flash player.

The Apple spokeswoman said that the company hoped those who bought the Shuffle would eventually graduate to buying other iPod products and the $100 gap between the mini and the Shuffle would differentiate the products in consumers' eyes.

Simon Dyson, senior analyst with Informa Media, believes the Shuffle strategy will work for Apple.

"Tthe cost of hard drive iPods has so far put off quite a few parents buying one for their kids. At $99 for the smaller flash player, there is likely to be plenty of kids that can now afford one. Also, those older consumers that baulked at the high price can now get involved."

He added that the reduced storage was still "user friendly".

Dyson also said going for the lower end of the market could ensure younger users don't defect to rival digital players. "If there was any criticism about Apple's digital music initiatives it was that the very young were restricted by hardware price. The introduction of low-cost hardware should extend its dominance for a few more years to come," he said.

Also at Macworld, Apple's Jobs unveiled a low-cost 'Mac mini' desktop system and a software productivity suite called iWork to compete with Microsoft Office.